Notes and Sources

53. M.L. Wald, “Costs Surge for Building Power Plants,” New York Times (July 10, 2007), web site www. nytimes.com/2007/07/10/business/worldbusiness/ 10energy.html.

54. Imperial Oil Resources Ventures, Ltd., “Mackenzie Gas Project: Supplemental Information Project Update,” National Energy Board Submission IPRCC. PR.07.08 (Calgary, Alberta, Canada, May 2007).

55. Rising oil prices do not necessarily lead to rising oil production from existing fields. Reservoir characteristics and the properties of the oil in the reservoirs primarily determine the maximum efficient recovery rate for a particular oil reservoir. Aggregate incremental rates of improvement in oil recovery diminish rapidly as oil prices rise. For example, a recent analysis of Alaska’s North Slope oil fields indicates that very little incremental recovery is achievable once oil prices exceed $60 per barrel. See National Energy Technology Laboratory, Arctic Energy Office, Alaska North Slope Oil and Gas: A Promising Future or an Area in Decline? Summary Report, DOE/NETL-2007/1280 (Fairbanks, AK, August 2007), web site www.netl.doe. gov/technologies/oil-gas/publications/EPreports/ANS SummaryReportFinalAugust2007.pdf. Technological progress is more likely to affect the ultimate oil recovery rate than oil prices or drilling costs.

56. Production began in 2000 at the Alpine Field, which has an estimated ultimate recoverable reserve of about 540 million barrels. Source: National Energy Technology Laboratory, Alaska North Slope Oil and Gas: A Promising Future or an Area in Decline? Summary Report, DOE/NETL-2007/1280.

57. A higher or lower level of future U.S. oil industry activity primarily affects the rate at which future U.S. oil production declines. High levels of activity can stabilize oil production for an extended period of time, especially through the application of EOR techniques, but eventually the depletion of the resource base causes production to decline. Lower levels of activity accelerate the rate of decline in future oil production.

58. Oil production in the shallow waters of the Gulf of Mexico declines slowly in all the cases.